Cord Cutting Is Very Real, And 25% Of Americans Won't Subscribe To Traditional Cable By Next Year

from the head-buried-firmly-in-the-sand dept

For years the traditional cable and broadcast industry has gone to great lengths to deny that cord cutting (getting rid of traditional cable TV) is real. First, we were told repeatedly that the phenomenon wasn’t happening at all. Next, the industry acknowledged that sure — a handful of people were ditching cable, but it didn’t matter because the people doing so were losers living in their mom’s basement. Then, we were told that cord cutting was real, but was only a minor phenomenon that would go away once Millennials started procreating.

Of course none of these talking points were true, but they helped cement a common belief among older cable and broadcast executives that the transformative shift to streaming video could be easily solved by doubling down on bad ideas. More price increases, more advertisements stuffed into each minute, more hubris, and more denial. Blindness to justify the milking of a dying cash cow instead of adapting.

But given the numbers we’ve seen over the last year or two, even the cable and broadcast industry has had to scale back its “head firmly in the sand” approach to market evolution. Last month MoffettNathanson analyst Craig Moffett, the telecom industry’s top media quote machine, pointed out that 2016’s 1.7% decline in traditional cable TV viewers was the biggest cord cutting acceleration on record. Kagan agreed, a recent report indicating that Pay TV providers lost around 1.9 million subscribers last year, the firm predicting a notable spike in the number of broadband-only homes:

“At the same time, American broadband-only homes grew much faster in 2016 ? increasing by more than 2 million. Kagan estimated the U.S. had 15.4 million non-multichannel broadband homes at the end of last year, up from 13.3 million end of 2015. That suggest that 13% of the country?s occupied households make the decision not to take a traditional multichannel TV package.”

Another new report by Convergence Research predicts that this broadband-only trend will only continue:

“US TV subscriber losses and cord cutter/never household additions saw a major increase in 2016 as compared to 2015: We estimate 2016 saw a decline of 2.05 million US TV subscribers, 2015 saw a decline of 1.16 million, and forecast a decline of 2.11 million TV subscribers for 2017…As of YE2016 we estimate 27.2 million US households (22.3% of HHs) did not have a traditional TV subscription with a Cable, Satellite, or Telco TV access provider, up from 24.2 million (20% of HHs) YE2015, and we forecast 30.3 million (24.6% of HHs) YE2017. 2015 saw 2.1 million, 2016 3 million, and we forecast 3.1 million 2017 cord cutter/never household additions.

The shorter version: by next year, one quarter of Americans will no longer subscribe to traditional cable. And that’s only going to accelerate as cheaper, better, streaming alternatives emerge.

In a functioning, healthy market, these companies would see the writing on the wall and adapt, benefiting users. And to be fair, some have tried (Dish’s Sling TV, AT&T’s DirecTV Now). But with the cable industry’s growing monopoly over broadband, a return to rubber-stamp regulation, and the looming death of net neutrality, many of these companies correctly understand they won’t have to seriously compete anytime soon. They can simply impose unnecessary usage caps and overage fees on uncompetitive broadband markets, then use zero rating to give their own services a leg up — while penalizing competitors.

Unfortunately for them, even that likely won’t “solve” the tectonic evolution that’s only just starting to take place. Ultimately, denial-prone cable and broadcast executives will be left with just one, unthinkable option: actually competing on cable TV price, flexibility and quality.

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Comments on “Cord Cutting Is Very Real, And 25% Of Americans Won't Subscribe To Traditional Cable By Next Year”

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66 Comments
TheResidentSkeptic says:

Re: Re:

That’s the scary part. They will try to get the “internet+TV package” approved as the ONLY service they sell…then try to make it illegal to NOT subscribe.

This will get really ugly before it finally resolves. Hopefully, we lose 500 channels of reality TV in the process…

Personally, I watch far more independent and BBC productions than American ones…on Amazon Prime Streaming…

/ proud cord-cutter and dish-dropper /

Anonymous Coward says:

Re: Re:

Making breaking DRM illegal (very important for content lockdown), massive use of zero-rating to better shape a garden (the AOL-dream reborn as with Facebook Free basics), different prices and windows for internet competitors (The “see, it is more expensive to watch tv on the internet”-propogation) and several other innovative trickery to reduce choices is just part of how these companies will operate in the next ungefaehr 10 years untill a compromise ensures them a better future than if they had to compete on an open market.

DannyB (profile) says:

25% are just losers

Isn’t it the opinion of cable executives that the people cutting the cord are just losers and don’t want to pay? Or something like that?

Can’t the cable companies just make up for lost customers by raising the price? That is a sustainable plan that would work forever — like printing money!

Even if some people are no longer cable customers, companies like Comcast can still be the most hated by the remaining 75% of people who still have cable.

Anonymous Coward says:

Re: Re: Re: 25% are just losers

You are one of the lucky few that haven’t had a bad call on their support line. I have had a couple fairly terrible support calls, I have also had some good calls. What really bugs me is I have had a rep visit my house and out right lie to me. The second time a rep came by, couple years later, I told the rep that they are either lying or have been given misinformation. I asked for a business card and told her I will call back after the date for the “upgrade” because it won’t happen. That her job was basically spreading mis information to all the houses in the area since a majority of them wouldn’t know how to check if they have been given a speed upgrade. Make the customers think comcast is doing something and then pull the plug. Sure assured me that Comcast was going through with the upgrade. She was a bit uncomfortable when I called back later asking about the upgrade. She told me that Comcast cancelled the upgraded. “Of course they did.”

DannyB (profile) says:

A solution to fix this

Oh, oh, I know!

Obviously the cord cutting, if it is happening at all, must be due to "job killing, business destroying regulations".

So let’s eliminate all possible regulations on cable companies so that cord cutting will stop.

Coming Soon to an executive order near you!

(very few animals were harmed in the making of this post)
(any resemblance to actual facts is unintentional and purely coincidental)

Anonymous Coward says:

Re: A solution to fix this

“So let’s eliminate all possible regulations on cable companies so that cord cutting will stop.
Coming Soon to an executive order near you!”

Does this eliminating all regulations include removing the regulation giving them a monopoly? Because if it does, It’s not a bad idea. If they didn’t have a monopoly would all this regulation even be necessary? Maybe? I would love to find out!

Anonymous Coward says:

Re: Re: Re:4 A solution to fix this

Actually, in countries with shared infrastructure, it is the final mile that is shared, as it is the most expensive to implement and maintain. The cost of digging in ductwork, or erecting a line of poles is about the same per mile whether it is for a single fiber of several fat bundles,.

Also, building another separate infrastructure is only likely to increase the digital divide between urban and rural communities. There is a significant subsidy effect, whereby profits from urban areas enable connecting the rural areas.

Anonymous Coward says:

So, the situation is still the same? Thanks for letting us know.

I’m trying to figure out what the point of this story is and the only thing I can come up with is Bode has a posting quota to meet.

Here are some more story ideas if you have trouble with your quota tomorrow:

* printer ink is expensive
* politicians don’t always look out for their constituents
* current airport security practices don’t make a lot of sense

You’re welcome.

Anonymous Coward says:

Re: Re: Re:

When you care about something it’s hard not to speak up when you think quality is dropping. This isn’t Reddit. My expectations for thoughtful, substantive pieces is pretty high.

For this story in particular, what does it add to the already voluminous (and often very good) back catalog of cord-cutting-is-real stories on TechDirt?

Anonymous Coward says:

Re: Re: Re:2 Re:

Assuming you give a shit about TechDirt, surely there’s a point where you would speak up as well?

Say Bode were to fire up a robo-journalism script and feed it the catalog of cord cutter stories and have it generate a new story every twelve hours. If you think that would be a bad thing, then we agree in principle. If you don’t see a problem with that, then we just have a different outlook on what publishing should be.

Anonymous Coward says:

Re: Re: Re:2 Re:

To answer your questions, my complaint was more about quality than quantity, although they are related. If CNN were to offer an over-the-top product today and TD wrote about it, I’d have no problem because that’s a change. Then if another big hold out did the same thing tomorrow, that too would be worth writing about. But in three weeks when Bode writes another story about cord cutting being a real trend, that’s not worth it. There’s no value in that story for anybody.

How many times a year should they post a story to let us know Robin Williams is still dead? That’s what it feels like to me.

Ninja (profile) says:

Re: Re: Re:3 Re:

Robin Williams being death is not going to change but if new data emerge showing that it was murder and not suicide that killed him then it makes sense to keep reporting on his death. Likewise, the cord-cutting phenomena is already documented and we know it is happening. But if new numbers emerge that show acceleration or a shift of behavior I am very interested. So as I said before, don’t read. I respect your lack of interest but I disagree with your comment.

Anonymous Coward says:

I had a guy from my ISP call me and try to upsell me a cable package. He was asking questions like what kind of shows do you and your wife watch. Do we have any kids. I told him we don’t watch TV. That is not how we consume our entertainment. He couldn’t wrap his head around the fact that we don’t watch TV/cable. AT ALL. We have a TV, but it’s only used for background noise and such. I may stream a show from time to time, but we simply don’t consume entertainment like that anymore. I can read my news online. I can use you tube to watch a bit of bed time media. I do a bit of pc gaming…that’s all the time I have for media consumption. It’s not that I don’t WANT cable, it’s that their is no need for it. I think more and more people are like that. Why pay for something you just don’t use or need?

Lady Gwyneth (profile) says:

I grew up with cable and traditional tv, I always hated it,I’m 18, part of the cable nevers because I can pay for as many online services as I want and it will never be more expensive than cable. My mom’s cable bill (satellite rather) is something like 200$ a month(being generous here), most online premium straming sites are 10$ a month, unless I can manage to watch 20 different services, I am guaranteed to always save money compared to her, and somehow I’m the stupid one.

Anonymous Coward says:

Investors Beware

I recently moved, landing in one the Comcast-only zones. If I subscribe to TV and Internet, my monthly rate would be $10 less per month than for Internet alone. Let’s be dead clear on this – Comcast would PAY me to pretend to use their cable TV services. I can only image that an ongoing intent to deceive investors is the goal of such subterfuge.

Anonymous Coward says:

In the process of cord cutting now. Just returned 3 boxes to Verizon, and downgraded services. There are plenty of options to ADD to your package online, but none to remove features from it. Have to actually talk to someone, who’s just amazed that anyone would want less than everything, and to not pay $200 a month for a package that originally started at “$79” a month (before box rental, modem rental, DVR fees, local sports fees, “because we’re a monopoly” fees, regulatory fees, etc…). Going with YouTube TV for the moment, because they have just about everything I watch, except for the Food Network (and that’s usually nothing but repeats of shows anyway, which I can get online if I feel the need). $35 a month, unlimited DVR, and once you get used to using an app on your phone for a remote, it’s amazing how many more features it actually offers. Hoping at some point in the near future they come out with a Roku app, but it’s so much better than what I had from Verizon.

Vic B (profile) says:

used them all - now no more

Comcast, U-Verse, Dish, Direct TV… I’ve had them all. I think they are all modeled after one another and thus offer the same low service. This weekend we finally put an end to our misery by canceling our service and switching to Sling for $20/month. All that because our $130/month package did not include ESPN… wtf?!? Good weekend after all: Warriors beat Portland and I’m saving $1320 over the next year.

ECA (profile) says:

I would be nice if'

WOW,
And what would it take to watch ALL the old tv series and movies in the PUBLIC DOMAIN???
Which can be interesting with a 1929 version od a Silent B&W of alice in wonderland and OTHERS, but the movie industry LOST TONS of movies to fire, and deterioration..BECAUSE THEY NEVER UPGRADED the filming materials AT LEAST 1 time every 10 years..

PS..YOU TUBE HAS A SELECTION..

Anonymous Coward says:

I dropped cable TV a couple of years ago. I haven’t really missed it. I do have the DTVNow promotional $35 100+ channel package so I can watch my local baseball. DTVNow has had it’s startup problems but it’s getting much better lately. Being able to bring a FireTV Stick on the road with me and watch my local baseball and news on the hotel wifi and TV makes me happy.

Brazillian Guy says:

>[Quote]”For years the traditional cable and broadcast industry has gone to great lengths to deny that cord cutting (getting rid of traditional cable TV) is real. First, we were told repeatedly that the phenomenon wasn’t happening at all. Next, the industry acknowledged that sure — a handful of people were ditching cable, but it didn’t matter because the people doing so were losers living in their mom’s basement. Then, we were told that cord cutting was real, but was only a minor phenomenon that would go away once Millennials started procreating.”[/Quote]

Haha, joke’s on them. Millennials aren’t only cord cutting, but also getting vasectomies and ligating their ovaries.

But maybe the cable industry is ready to wait for a good 20 years to enthrall those who want to have children after getting some stability.

Anonymous Coward says:

I dropped the whole Comcast TV/phone/internet package, just retaining internet (still Comcast, our only choice.) I was tired of the ever-higher prices due to their inexorable Fee Creep jumps of $30+ every year. I’d keep going to a lower tier, but finally ran out of lower tiers, and the Comcast rep was incredibly snotty. I also purchased my own modem to abort their ridiculous rental fees (and their god-awful low-quality modems.) Went from $165 a month to $44.99 a month. Very happy.

One question: what do we do when Comcast starts applying their usual Fee Creep jumps to internet service? Because once most of us are internet-only, that’s obviously going to be next.

Jim says:

Here is you downfall

You voted for trumph, he, he. Bozo’s or you didn’t vote. Right, now, get this. No service. America invented, and populated something called noe, the internet. Others implemented their versions at a faster rate, and have to please their customers. Under trumphs courts, you do not have to please your customers. Remember only our and any dictatorship like North Korea can that happen.now, how is Comcast going to please us? Raise their speeds, or the boards pay? How will at&t please us? How would you like to wait thirty minutes to download a two minute commercial? The little rotator propeller just flying, get ready folks, here it comes..

TimK (profile) says:

I want to cut the cord!

I want to be a 25%-er! YouTube TV is almost ready for me to make the move. As soon as they integrate it into something besides a Chromecast (like a Roku) that allows me to use a remote control and increase concurrent users to more than 3, I’m there. It has everything I need. 90% of the “TV” watched in my household is my kids on Netflix. The remaining 10% is a mix of network and popular cable channels. If I could get it all on one “box” that I don’t have to “rent” every month, the savings would be significant. Even after switching to a jacked up rate for ‘broadband only’ I’d still save money. I probably have to switch from Verizon to Comcast (or at least pretend to) in order to get a reasonable ‘customer rate’, but it will be worth it.

My_Name_Here says:

Cord Cut and Replaced By More Cord

I think one of the things with all of these cord cutting stories is that you miss the real point: Americans cut the cord only to replace it with other “cords”.

The discussion would have a bigger value if Americans were getting rid of cable and replacing it with books or more exercise (something most of them need). Instead, they are replacing traditional cable with what can nicely be referred to as non-traditional cable alternatives.

What does that mean? Instead of HBO, they are paying for Netflix. They are paying for memberships to streaming sites, are paying for streaming boxes and equipment, and so on. Then they are paying for more expensive higher speed internet options to do it all with. They are shunning radio stations and moving to paid streaming options for their smart phones.

In some cases, Americans are spending more on OTA antennas and such to maintain local programming.

Most importantly, many of the so called cord cutters are doing to the same company (cable) to get the internet services they need to do the rest. The cord isn’t cut, it’s just carrying different stuff.

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